Im a tax professional and controller consultant for several

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I'm a tax professional and controller consultant for several small companies...I have a question that I need some clarity on. Can a $3million dollar company with a cost inventory method (per tax code) file corporate tax returns on a cash basis? They are currently on an accrual basis accounting method.

Your average annual gross receipts for each prior tax year ending on or after December 17, 1998, is $1 million or less. (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing by 3.)

Qualifying small business taxpayer. You are a qualifying small business taxpayer if:

Your average annual gross receipts for each prior tax year ending on or after December 31, 2000, is more than $1 million but not more than $10 million. (Your average annual gross receipts for a tax year is figured by adding the gross receipts for that tax year and the 2 preceding tax years and dividing the total by 3.)

You are not prohibited from using the cash method under section 448 of the Internal Revenue Code.

Your principal business activity is an eligible business (described in Publication 538 and Revenue Procedure 2002-28).

Megan C :

If you qualify to account under the cash basis of accounting, you would have to file form 3115 to make the change from accrual to cash.

Megan C :

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Thanks, XXXXX XXXXX the opportunity to assist. It was a pleasure working with you today. If you have further questions, please reply below. Otherwise, please rate as "excellent' so that I may receive credit for assisting you today.

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

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